RBA holds rates steady at 1.5%

The RBA has kept rates steady at their historical low of 1.5 per cent, as widely expected.

The Australian dollar, which dipped earlier in the day following the release of building approvals data, fell another fifth of a US cent following the announcement to just above US78¢.

Philip Lowe, governor of the Reserve Bank of Australia, is yet to move rates in his tenure. Photo: Sergio Dionisio

Traders are pricing in a one-in-four chance of a rate rise by the February meeting next year, with low odds of a move before then. By the end of the 2018, markets are pricing in the RBA to have hiked twice. A run of solid economic data in Australia and a global turn away from the extremes of stimulative monetary policy have also convinced some economists to predict local rates will reach 2 per cent next year.

But not all are convinced, pointing to the difficulty in raising borrowing costs at a time of historically high levels of household debt.

Rates last moved in August 2016 when then-governor Glenn Stevens cut the central bank’s official rates target by a quarter of a percentage point.